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Comstock Resources To Acquire Covey Park Energy For USD 2.2 Billion

Gasoil News - Published on Wed, 12 Jun 2019

Image Source: NYSE
Comstock Resources Inc and Covey Park Energy LLC jointly announced that Comstock has entered into an agreement under which Comstock will acquire Covey Park in a cash and stock transaction valued at approximately USD 2.2 billion, including the assumption of Covey Park's outstanding debt and the retirement of Covey Park's existing preferred units which in the aggregate total approximately USD 1.1 billion. Covey Park is a privately held natural gas company with operations in the core of the Haynesville shale basin. The acquisition of Covey Park complements and expands Comstock's position in the Haynesville shale and accelerates its progress towards its strategic and financial goals of sustainable free cash flow generation and reduced leverage.

Transaction highlights include:

Comstock to Become the Basin Leader in the Haynesville, a Premier Natural Gas Basin with Superior Economics

Over 1.1 Bcfe per day of net production, approximately 374,000 net acres and 5.4 Tcfe of SEC proved reserves and 7.6 Tcfe SPE proved reserves

293,000 net Haynesville acres with approximately 2,000 net drilling locations, including approximately 1,300 net locations with lateral length over 5,000 feet

Combined management team that has drilled over 500 horizontal Haynesville shale wells

Free Cash Flow Generation Resulting from Industry Leading Margins

Best-in-class natural gas unit cost structure with industry leading EBITDAX margin of 76%

EBITDAX of USD 935 million based on pro forma annualized 1Q 2019 results

Pro forma company expects to fund drilling plan within operating cash flow

Pro forma 2019 estimated leverage ratio of 2.9x, targeting a reduction to under 2.0x by 2021

Enhances capital efficiency and operating margins on a per unit basis while providing over USD 25 million in anticipated annual corporate G&A savings

Low Cost, Flexible Natural Gas Marketing Optionality

500 miles of gas gathering infrastructure

Limited basis risk due to proximity to Gulf Coast demand and contracts tied to Henry Hub

Low gathering, treating and transport costs

No unmet minimum volume commitments

Aligns Partners to Achieve Success

Successful Dallas businessman, Jerry Jones, will remain the Company's largest shareholder with 75% ownership interest and a cumulative investment of USD 1.1 billion

Source :

Posted By : Rabi Wangkhem on Wed, 12 Jun 2019
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